I’m a journalist covering a rather small industry. One of this industry’s major companies (which is traded on NASDAQ) has objected to my presence in, and reporting of, the members’ meeting of the largest industry organization. (I am a member of the organization.) They claim that in this meeting they would like “to present strategies and corporate initiatives in a candid manner to [association] members and cannot do that if media then reports this widely to the trades.”
Apart from the ludicrous assumption that they could say something to several hundred people in a meeting with the expectation of keeping it secret, would such a move violate securities laws or regulations? IANA securities expert, but are publicly traded companies permitted to offer information to select outsiders but not the press? Wouldn’t that violate insider trading regulations?
I’d appreciate any authoritative info (including cites) on this question. Thanks.
I realize that this is not as substantive an answer as you asked for, but until someone comes along with cites, let me clarify something as a former officer of a public company:
Disclosure rules apply only to material facts. That is, a discussion of strategies, approaches, marketing ideas, etc. are not subject to disclosure rules. Anything material to the performance of a company, such as a decision to start or stop a line of business, a change in accounting practices and the like, constrain anyone who hears of such things from profiting from that knowledge until the information is publicly disclosed.
In the example you give, unless they have arrived at a significant agreement, or made a material change to the way they do business, there is nothing to prevent them from discussing it in any forum they choose. And, even if they did disclose something material, its only a problem if someone acts on it.
Material is an accounting term defined as something that would affect the opinion of an educated user of financial information (such as an investor). A material fact means something that is both significant and more than just speculative.
As long as a public company is merely looking at options, there are probably no material facts that need to be disclosed. For example, the company could research the option of selling off a division without having to disclose it. If the officers met and reached a firm decision that they intended to sell it, then it would become a material fact worthy of disclosure.
I have seen companies put out a statement at the beginning of a meeting with words to the effect that the information being presented only lists potential plans and is not a guarantee that they will actually do anything they present. That covers the legal responsibility.
But they can’t hide behind SEC rules to prevent you from attending the meeting. As a member of the organization, you have as much right to see their presentation as anyone in that organization.
Indeed. A journalist, and I am one, has very little ‘right’ to any form of non-public information. If you get it you can run with it. But most of the time such information from a corporation is NOT subject to public access laws except for government required filings and such.
So, again: They have NO obligation, other than whatever bylaws exist for your trade organization, to allow you access to presentations and other internal data. It may or may not be in their best interest to allow you access to it but that’s their call, not yours.
Of course, it would be wiser for them to let you in under some form of embargo but not everyone sees the usefulness of not pissing off trade journalists.
It’s actually the other way around: They weren’t claiming that I couldn’t attend because of SEC rules; I was wondering if what they apparently wanted to do – tell the people in the meeting, but not the press – might violate the rules. You all seem to be saying no. And I should have realized that the top execs of a publicly held company would know better than to violate the rules.
Right. And the organization has told me that their official policy is that they have no policy that would permit barring the press from their meetings. In other words, I’ll be admitted as I always have before.
Yes, it’s just rather naive of them to think, in this day and age, that they can speak to several hundred people in a meeting (to which the press has not been admitted) and expect that the content of that speech will remain secret and unreported.
Tell it, brother! But in this case, there is no time-sensitive info. They just don’t like the fact that, unlike most of the mainstream media, I point out their inaccuracies and inconsistencies, and generally hold their feet to the fire. They are trying to strike out at me, as they did a few years ago, when they canceled all of their subscriptions (a significant portion of my total subscriber base) because they were unhappy about an entirely accurate point I made in a news report that happened to be unfavorable to them. In both cases, the result is that they look petty and petulant.
Um, if that were really the case I can probably come up with a long list of white collar criminal cases that never would have happened.
Apropos your original question (I think you’re the OP; apologies if you aren’t), I’m not sure that publicly held companies are required to disclose anything beyond what they’re required to put in their financial reports and their required SEC filings. But IANAL (and most emphatically IANASecuritiesL), so I could be mistaken.
